Forex Analysis – Strong H4 resistance area now within touching distance!
Diving straight into the (technical) action this morning, we can see that price finally conquered the 1.25 handle by yesterday’s close, which had capped downside since mid-Nov. With that being said, the team’s focus is now on the H4 resistance area planted just above at 1.2525-1.2557.
The area boasts a H4 61.8% Fib resistance at 1.2531, a H4 mid-way resistance at 1.2550, TWO H4 AB=CD bearish completion points at 1.2553/1.2555 and the top edge of the H4 zone represents a daily Quasimodo resistance at 1.2557. Now, as we mentioned in previous reports, in view of the last point, this does mean there’s a chance that price could fake through our H4 resistance zone, so traders need to be prepared for that.
Our suggestions: While a fakeout above the aforementioned H4 resistance barrier is a possibility, we can still trade from here. Instead of placing a pending sell order and positioning stops just above the zone (not a good idea when a fakeout is likely), waiting for a reasonably sized H4 bearish candle to form within the walls of this region is by far, the safer, more conservative route to take here.
This will, of course, not guarantee a winning trade, but will show that sellers have taken an interest here before we pull the trigger! Data points to consider: UK manufacturing PMI at 9.30am. US Jobless claims at 1.30pm, followed by the US ISM manufacturing release at 3pm GMT.